How do you create an industry from scratch? Especially an industry whose growth is urgently needed? An industry that’s technically complex? In a country whose geography, infrastructure, and institutions make its growth all the more challenging?
That’s right, I'm talking about offshore wind energy in Japan. Although "from scratch" is an overstatement, it's not far off.
Japan's vast coastline and even vaster surrounding oceans make offshore wind the marquee solution for its clean energy transition. And that, in turn, means stimulating domestic manufacturing, job creation, and foreign investments. It also means reducing dependence on fossil fuels and the political and economic vicissitudes intrinsic to relying on oil, gas, and coal imports.
When the Japanese government talks about the energy transition, it often refers to several technologies that will allegedly transform Japan from a fossil-guzzling society to one that runs on clean energy. These are nuclear, hydrogen, ammonia, natural gas (as a "bridge fuel"), carbon capture, and "next-generation renewables." Along with perovskite solar cells, offshore wind turbines are what Japanese leaders mean by next-gen renewables.
But frankly, offshore wind will generate a heck of a lot more clean energy than perovskites. It would also be an unmitigated good for the climate and Japan's international competitiveness compared to questionable efforts at expanding hydrogen and ammonia (most of which is set to be blue or gray), natural gas, and carbon capture. As such, there is simply no question that Japan needs to focus its policy reforms, R&D, and investments on offshore wind.
Climate Integrate, a Tokyo-based climate and energy think tank, released a report this month that contains in an easy-to-read overview of Japan's offshore wind landscape. From an engineering perspective, offshore wind is arguably one of the most complex electricity generation sources (second only to nuclear, I would say). But the report lays out in simple terms and aesthetically appealing graphics where Japan stands, where it needs to go, and how to get there to make offshore wind one of the main sources of energy.
Here I'd like to highlight some of the important points in Climate Integrate's report, adding my own thoughts and questions as we go along.
Offshore wind in Japan today
Japan’s offshore wind potential is enormous. Estimates vary, but Climate Integrates cites a credible estimate by the Japan Wind Energy Council: 552 gigawatts (GW) of generation capacity when fixed-bottom and floating offshore wind are combined. That’s equivalent to about 550 nuclear reactors and well above Japan’s total electricity generation capacity of about 312 GW today.
But Japan has fallen far short of capitalizing on this abundant resource. In 2022, Japan only had 225 megawatts (MW) of offshore wind installations or 0.04% of its full potential. In absolute terms, this was way below China, the UK, Germany, the Netherlands, Denmark, Belgium, and several other countries.
So what’s been the barrier to deployment? The report doesn’t dwell on this question in much detail, only pointing to the new and lengthy requirements for environmental impact assessments and the bottlenecks of connecting offshore wind projects to the electric grid. Suffice it to say that what’s holding offshore wind back today are administrative barriers. That’s a much better world than in the late 20th century when the powerful LDP-bureaucracy-energy industry triangle kept wind energy out of favor in Japan’s energy mix.
There’s a yawning gap between potential and status quo. The government and corporate elites know it. The government convened the “public-private committee for the industrial competitiveness of offshore wind” and in December 2020, that committee set targets of 10 GW of offshore wind by 2030 and between 30-45 GW by 2040.
Over the last handful of years, the government’s been working on policy and administrative reforms to make offshore wind deployment easier, like designating coastal areas across Japan as offshore wind zones.
How offshore wind will benefit Japan
To me, the beneficial impacts of ramping up offshore wind development are at the core of this report. Let’s look at a few.
Economic boon throughout the supply chain
On top of deploying offshore wind turbines in its own waters, Japan is looking to bolster its own manufacturing capabilities for offshore wind to become a global leader. To do that, domestic supply chains need to be built.
What will investments in each of the supply chain stages do for Japan? Again citing the Japan Wind Energy Association, deploying 10 GW of offshore wind by 2030 could be worth ¥5-6 trillion in direct investment, create 80,000-90,000 jobs, and create ¥13-15 trillion in economic ripple effects. Although precise figures and assumptions differ, the government’s own projections foresee big economic benefits.
So what are the key stages in the offshore wind supply chain?
Turbines and components: The parts that make up the actual turbines (the generators, gearbox, bearings, magnets, towers, etc.) the parts that keep the turbines upright in water (the anchors and the fixed-bottom and floating foundations), and the parts that carry the electricity back to shore and make it usable for civilization (high-voltage dynamic cables, transformers) all need to be built by Japanese manufacturers, either by themselves or, more likely in the short term, jointly with foreign counterparts.
Ports: Offshore wind requires a lot more infrastructure than just the generation facilities themselves. Industrial hub ports (for work vessels, manufacturing of components and equipment), base ports and ports for operation and maintenance are also crucial links in the supply chain. Japan needs between 13-19 base ports to get to the 2030 offshore wind targets, and between 20-28 base ports to hit the 2040 targets.
Vessels: In other words, ships of different kinds. Vessels are needed for installing turbines and for moving crew for the installation and maintenance. The government estimates that Japan would need about 50 vessels by 2030 and 200 by 2040 to hit the targets set out by the public private committee mentioned above. A handful of Japanese companies (Shimizu Corporation and Penta Ocean, for example) have recently announced the completion of their first vessels.
Involving and benefitting local communities
One of the persistent issues with large renewable energy projects in Japan is the question of how to coexist with the communities that are affected by those projects. Offshore wind is no different.
Climate Integrate urges the national and local governments and project developers to take coordination with local communities, especially the fishing stakeholders, seriously. Once an area is designated as a “prospective zone” (one of the stages in the designation process leading up to project auctions), the government is to set up a council that includes national and local officials, fishery groups, and academics to serve as a forum for consultation.
While an ill-conceived project can alienate local communities, a well-designed project can benefit them. For example, reporting by ANN News shows that a fishing town struggling with an ageing population welcomed the first floating offshore wind project in Nagasaki Prefecture because the turbines can help revive the coral that was degraded due to warming waters, and attract young workers into the town.
Recommendations for policymakers
Climate Integrate has 4 policy recommendations to accelerate offshore wind deployment in Japan:
Create a national grand design with clear and ambitious targets: Roadmaps and targets set expectations domestically and globally. Climate Integrate urges the government to create a grand design, providing an overall picture of how Japan plans to promote offshore wind. Such grand design should be ambitious but specific, outlining targets for medium- and long-term installation targets and separate out floating and fixed-bottom offshore wind.
Create a roadmap for the full scope of the offshore wind supply chain: Getting even more specific, Climate Integrate recommends that the government and industry group set roadmaps for each of the components required to hit the 10GW by 2030 and 45GW by 2045 deployment targets.
Clarify policies for using Japan’s exclusive economic zone (EEZ): This is key. Japan’s EEZ (sea area in which a sovereign state has exclusive rights over the exploration and use of marine resources) is some 12 times Japan’s land area. Building wind farms in its EEZ is the critical solution to Japan’s mass offshore wind deployment. To do this, though, processes need to be in place for coordinating with fishing interests, shipping routes, and other stakeholders.
Promote consensus-building with local communities: Climate Integrate really hammers this point home. The report reiterates that it’s critical for developers and public officials to build consensus with local residents, especially fishermen.